With six months to go, California hustles to get recreational marijuana framework in place

Eight months ago, California voters approved Proposition 64, making the recreational use of marijuana by those 21 and older legal. In barely more than six months, state officials have to make sure Prop 64 becomes a reality by putting a legal and regulatory framework in place.

Regulations for production and sale of adult-use cannabis are due at the beginning of 2018, and the scope of the rollout is huge — including cultivation, manufacturing, testing, distribution and sales.

“The clock is ticking,” said Lori Ajax, the chief of the state’s Bureau of Medical Cannabis Regulation for California, who in charge of coordinating California’s efforts to oversee a cannabis industry that some estimate may soon be worth between $4 billion to $7 billion. “We all know what we have to get done and failure is not an option for us.”

Other states have legalized recreational marijuana laws but California is by far the largest to do so — both in terms of population and in size of its agricultural base — and principals in every sector of the cannabis industry are watching closely.

“I don’t envy them,” said Jack Scatizzi, managing director at Canopy San Diego, a technology accelerator aimed at finding and funding cannabis companies. “There’s a lot of pressure on them but I think this is really the opportunity to get this right, on scale.”

Earlier this month, the state Legislature passed a budget trailer bill that essentially marries the rules for medicinal marijuana with recreational use, which will give the state one set of regulations instead of two.

Gov. Jerry Brown is expected to sign the bill into law.

“I think it streamlines things and hopefully it will be less expensive” for the industry to operate, Ajax said.

State officials plan to have an online licensing system up before Jan. 1, 2018, allowing people to apply ahead of time. The state can then perform background checks and vet applicants, although Ajax said completing the process before the first of the year “is going to be a challenge.”

Licensing fees have not been finalized. The California Food and Agriculture and the Department of Public Health have been releasing proposals and are still drafting environmental impact reports.

“I think we’re right on schedule,” Ajax said.

As per state law, the bureau cannot issue state licenses unless applicants have received the OK from their local governments.

However, the state is allowed to issue temporary licenses to those already in compliance with their local jurisdictions.

“This will get done but I don’t think this will be a situation where come Jan. 1, you can walk in and get into any dispensary and buy,” said Scatizzi. “It will probably be a slow roll out.”

Ajax said the state will take a measured approach.

“If something’s not working, we have to change direction,” she said. “This is a growing industry so we’ve got to be quick, we’ve got to be nimble.”

The rollout may have national implications. Due to California’s sheer size, a smooth transition — or, alternately, a clumsy one — may go a long way toward influencing other states’ attitudes about marijuana, especially considering that U.S. Attorney General Jeff Sessions is a harsh critic of legalizing pot.

“If California can do it right,” Scatizzi said, “and if the amount of taxes they’re predicting comes in, and if it’s able to (reduce) some of our deficits, with no increase in cannabis-related accidents and we don’t see an increases in crimes related to cannabis, it’s going to blow all of the naysayers out of the water.”

In Canada, marijuana for medicinal purposes is already legal in every province and the country’s lawmakers are on the verge of doing the same thing for recreation use, effective July 2018.

Jacob Crow, the CEO of Toronto-based BudTender, said a successful implementation in California depends on coordinating each sector of the industry.

“I think what California can learn from Canada is go as strict as possible and then move off. That’s the way to do it,” Crow said. “If you go too loose, there’s too much of an opportunity for the black market. You see that in Colorado. They’ve killed off the black market significantly but 33 percent of all cannabis is being sold through the black market. You need to root that out from the beginning and then move on from there.”

Christian Valdez is CEO of Traffic Roots, a digital advertising firm aimed at connecting cannabis users to industry producers, wants to make sure the new regulations don’t impede his company, which is just getting launched.

“Government is very good at making loose and broad laws that aren’t really defined enough to make progress,” he said.

Melissa Stapley, who runs MJ Hybrid Solutions, a small business in San Diego that specializes in sales training for cannabis outlets, said the state needs to institute safety and educational guidelines, especially as the market for edible marijuana grows.

Too many potential customers, Stapley said, don’t know what can happen if they take too much too fast.

“It’s not like alcohol,” Stapley said, “Everyone knows that if you buy a six-pack of beer, you can’t go home and drink all six in 15 minutes.”